Influential investor-backed initiative sets out fresh plan to crank up pressure on polluting corporates that fail to implement credible net zero transition plans
The Climate Action 100+ of leading global investors has officially launched a new phase of its corporate engagement programme, with a view to increasing pressure on the world's largest emitters to adopt credible net zero transition plans.
Launched in 2017, the Climate Action 100+ initiative brings together over 700 investors, collectively responsible for $68tr in assets under management, to co-ordinate engagement with the world's most carbon intensive corporates that will play an outsized role in determining whether global climate goals are met.
In an update late last week, the group said that over the last five years it has helped increase the share of carbon intensive corporates with net zero targets from 20 per cent to 75 per cent.
However, it stressed that there was now an urgent need for a new phase in its engagement efforts that "shifts focus from corporate climate-related disclosure to the implementation of corporate climate transition plans, to create long-term shareholder value in this critical decade of climate action".
As such, the group has renewed its targets for investors signing up to the initiative and revamped its guidance on how investors can engage with carbon intensive companies to help accelerate progress towards net zero emissions.
Specifically, the group said that through to 2030 signatories would be asked to implement strong governance frameworks for addressing climate risks; take action to actively reduce greenhouse gas emissions across the value chain, including engagement with stakeholders such as policymakers and other actors to address the sectoral barriers to transition; and provide enhanced corporate disclosure on the implementation of transition plans.
The new goals are set to be accompanied by "stronger and more robust engagement strategies", including calls for investors to submit an annual schedule of engagement, specifying the actions and escalations strategies they intend to deploy when talking to carbon intensive companies.
Investors will also be expected to disclose votes and rationales on shareholder votes flagged by the group, where allowable by jurisdiction, practical, and in line with signatories' own internal policies and business objectives.
In addition, the group said it had enhanced its Net Zero Company Benchmark to better track how companies are transitioning towards net zero emissions in different industries.
Francois Humbert, current Steering Committee chair and lead engagement manager at Generali Insurance asset management, said it was "time to demonstrate the additionality of the initiative, and to work with our investor signatories to support an orderly, just transition for their focus companies".
"Additional expected transparency in our practices will ensure greater accountability, and the new governance of the Steering Committee will enable us to be more representatives of the wide diversity of signatories," he said. "In addition, the new sector and thematic engagements will enable signatories to bring additional value inside their engagement groups and to the companies they engage."
Mindy Lubber, president and CEO of US investor group Ceres and a member of the Climate Action 100+ global Steering Committee, said now it was time for investors to "turn their words into deeds".
"Over the past five years, Climate Action 100+ has made tremendous strides in engaging with the largest investors and companies to address the material financial risks of climate change," she said. "The majority of the initiative's focus companies have made serious commitments to reach net zero, and some are even beginning to publish transition plans on how they will get there... The economic case for action is stronger than ever, and in this next phase Climate Action 100+ will raise our ambition and expand our efforts to achieve lasting climate action that accelerates the just transition to a zero emissions future."
The move comes as sustainable investor initiatives come under growing pressure from regulators, campaigners, and member companies.
US Republican politicians have sought to characterise attempts by investors to decarbonise their portfolios as a breach of fiduciary duty, while demanding standards and reporting requirements have prompted several leading investors to quit as number of international net zero alliances.
Meanwhile, campaigners have continued to warn that many investors are failing to translate their net zero targets into sufficiently robust divestment and engagement strategies that would increase pressure on the firms they own to decarbonise.
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